How to Make Money Trading Options - The Vertical Spread
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- Опубликовано: 23 авг 2024
- 📣 LEARN ABOUT OUR PROFITABLE TRADING SYSTEMS | skyviewtrading...
The Short Vertical Spread (aka Vertical Credit Spread) is the most basic options trading spread.
Use this option spreads strategy to sell option time premium with very little risk and capital. Quit letting time decay ruin your trades and start letting it work in your favor. You can trade this strategy with an account size of just 2k while allocating very little capital to each trade.
Watch this video to fully understand how this strategy works and how to trade it.
Enjoy the video? Please like, share, comment, and subscribe!
Thank you!
Sky View Trading
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This is just superb, I've been looking for "best option strategy ever pdf" for a while now, and I think this has helped. Ever heard of - Winoorfa Option Olegroson - (should be on google have a look ) ? Ive heard some unbelievable things about it and my friend got amazing success with it.
Winner of a video, I been tryin to find out about "trading binary options for a living" for a while now, and I think this has helped. Have you heard people talk about - Winoorfa Option Olegroson - (Have a quick look on google cant remember the place now ) ? Ive heard some pretty good things about it and my mate got cool results with it.
This is glorious, been searching for "online option stock trading" for a while now, and I think this has helped. Ever heard of - Winoorfa Option Olegroson - (just google it ) ? Ive heard some unbelievable things about it and my buddy got amazing success with it.
This is glorious, I have been researching "trade index options" for a while now, and I think this has helped. Have you heard people talk about - Winoorfa Option Olegroson - (do a google search ) ? Ive heard some awesome things about it and my brother in law got cool success with it.
Wait....the stock is at $73, you buy a call at $100. The stock stays below $100 yet you make $300? Do you not make money on a call only when it's above the strike of $100?🤯
I love this video. I laughed when you said "What happens if Netflix stock decides to go nuts and ends up at $130.00/per share" Looking 4 years later, Netflix is at $436.00 per share. Lots can happen in 4 years ;)
Haha yes, it certainly can! Of course, we’re speaking of options that expire in 30 days or so rather than 4 years. But yea, it’s crazy to think NFLX was less than 100 just 4 years ago!
@@skyviewtrading let's not think about tesla then we might get insane.
now its $500!
@@skyviewtrading How about that GME
Lol. now @557.48
I thought I was starting to understand, then my brain melted and I had to have another beer to put out the flames....thanks for the video...
Same
i can relate
The most difficult part of trading is keeping emotion under control sticking to a strategy. Very few people can make an honest living off trading full time, but some can I have seen it done. Many more make money off selling trading systems it's much like the gold rush 1800's where 1000's of people from the east traveled west to find gold 99% never found anything either left broke, or worse. The people who sold them the equipment, and mining claims walked away rich.
Well said
this is by far a great way to explain the vertical spread.. i also love the animations, very clean and clear.. great job
Thanks! More to come!
Not sure about OptionHouse. But with TD Ameritrade, you just need 2,000 in your account to trade this strategy. Save up! :)
you can have a "PAPER TRADING"" account at I.B.
Yep. It's never too early to start paper trading while saving for a real account! Our favorite is "paper money" by TD Ameritrade (just google 'thinkorswim paper money').
Sky View Trading thanks for the videos
At 1:14 when he mentioned that Netflix stock is trading at $93/ share. I literally paused the video and look at how long ago it was made because. Netflix stock is now trading at $500/ share. Insane!
Thanks to quarantine
same! crazy
My brain is on fire haha
I have so many questions
Great video; I’m practicing in my paper money thinkorswim. But I need help calculating max loss. In your example how did you come to value the sell call at $30 and buy call at $25?
Gaurav Patel because the strike price of the buy call was 5$ more than the strike price of the sell call.
😂. I know what you mean. I’ve been binge watching options videos for weeks trying to learn, and I still feel like I have no idea
Just the difference between stock value and strike prices
I am literally so much confused ,need a friend who could explain the basic btw great video
all of this calculating is most likely done for you on the trading platform you are using
You’ve explained what it looks like to trade options far more clearly than anyone else I know ever has!
Thank you so much! Consider subscribing for more videos :)
@@skyviewtrading if Netflix goes to 103 now you can’t buy the 105 contract does that mean you have to buy 100 shares at 103?
Well explained. For beginners with small trading accounts this is one of the safest/most profitable strategies
Alexander hi you sound knowledgeable, could you explain what the catch is here? Why aren’t more people doing this if it’s supposed to win more often than not? Watching this has me believing I will absolutely make money doing this unless something crazy happens
@@WealthWave96 its gambling, but with more variables. making money will always be 50/50
Devaughn Means
This isn’t a strategy for trading, it’s a strategy for how to place a trade with options to hedge yourself so you don’t have to risk 100% of your money if your option expires worthless. If you don’t know what you’re doing you’re still going to lose money.
Here is the thing:
If you are profitable trading stocks you might be profitable using this strategy, but if you are not profitable trading stocks, you would still lose money overall.
Mathew
If making money was 50/50 you wouldn’t see professionals winning 70-80% of their trades.
@@donb2527 unless all professionals are actively showing their wins and losses i wouldn't try to throw numbers out like that. minimized losses and maximize wins to be profitable. However i will always say 50/50 to any trade unless i can magically see into the future to learn information company's withhold from the public at any given date
Don't you wish you found this guy two years ago? I do ...wow!
Chuck Brown You did find him two years sho
@@k10jenner41 🤣
Still relevant T.T
@@k10jenner41 😂😂😂
Tom R 😅
I got into the trade market with a 6k deposit,today I’ve more than 6 figures saved in just seven months.Through the decades stock trading has proven to be profitable to several individuals around the world.,but personally you will never understand how profitable stock trading is until you start investing in the share market
You just basically said everything about trading , You're profiting from the market ,How!! lol.. I'm very new to this and all I've been doing lately is incur losses,it just dawned on me that it was a very funny move to just jump into the market without any proper experience
Lol my friends didn’t believe me either when I told them I’d began making good figures off the trade market while in retirement,they thought I did it myself but it was working with a pro risk analyst and trader Noud Mikan,he trades on my behalf in the market and generates profits on my behalf his services has been gold to me.He also charges commission on profit earned.
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Indeed you’re right. After contacting on Mail I also did my research and found his bio page on google. [ noudmikan. info ]
Truly happy to have taken your advise here..Smart man I must say
Trading can be awful..But having to make 1k-5k a day is very rewarding as long as you record everything and don't compare yourself to other traders or investors that are much much more wealthier and better at trading than you.
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I'm interested to trade but I don't know how to start, been going from video to video but I don't understand a thing, how can i reach your broker?
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My head literally hurts from trying to wrap my head around this concept ugh
This was great, I have been researching "how much can you make day trading options?" for a while now, and I think this has helped. Ever heard of - Senichael Uncommunicative Supremacy - (just google it )?
It is an awesome exclusive product for discovering how to trade options like a pro without the normal expense. Ive heard some awesome things about it and my partner got cool results with it.
took me abit to get it too.
first whether its call or put - you have to grasp these two first
calls credit spreads you want to sell the higher strike price meaning closer to money, which will be a higher premium,
then sell a lower strike price which will be a lower premium * remember these are calls* The strike price is important because thats how much u are liable for so if the higher premium is 250 strike and lower is 255 strike you calculate
255 - 250 = 5 dollars times 100 = 500 $ you are responsible for but remeber selling the lower strike calls gave you some money to lower the 500$
So the know the strike difference and the premiums difference. DONT MAKE IT TOOO WIDE thinking u will make alot of money because the strike prices will kill u
Playtoven thanks for your explanation! I think one is a buy instead of selling two calls at different strikes, right?
I am from the future. Netflix stock will go to 422 and then dump to 350 after earning. So you are good buying here.
PunkJabi hahahahhahaha lmao
U failed
ballislife2351 where did that bring you
ballislife2351 back to me
Im from the future, bitcoin will be over $200.000 next month because everyone will be buying bitcoin as christmas presants for their friends and family
One week ago I learned what options trading was after messing around with normal stock trading with little success. When I first learned about options I was so confused. Now after one week I know so much more and I understand it way better. It just takes a little bit of time to wrap your head around it but it will eventually make sense!
Thanks for the comment!
I am not trying to be smart but let me add that the trade won't have the same effect for everyone. but I appreciate the fact that the vlogger is a great guy explaining and laying out the scenarios.
Thank you so much for this tutorial! Vertical Spread options completely changed the game for me. I love the capped losses and the capped gains, and there's always affordable entry points with good odds. I've only been trading options for a month, and it's been the biggest highs and biggest lows for sure. I'm also building up my experience and documenting my experience on my channel.
hey green....to do a vertical spread does one have to own the shares first...aka like a covered call? this is the part thats confusing me....or is it just a matter of buying 2 calls?
@@scottreesetradinginvesting7936 forgot i left this comment....well 7 months later and spreads are my favorite trading tool. i had to close a call spread on QQQ today since that fkr has been on a bull run since mon
I get it.....but i dont get it
I'm a little over a year in. I've basically been like the little engine that could: I think I can, I think I can. I've been all over the map starting at 10K to dropping to $200 at my lowest. Brought it back up to $700 on penny stocks and then caught GME at $54 with a long call. Made 5k that day. Closed the option. Bought NOK, AMC, and BB at the opening bell the next day with 3k. Was up to 33k by around noon. Then Robinhood (Vald the Retailer Impaler) killed my positions. Hung in there thinking the restrictions would be called off within a day. I ended that trade with 4k left and a large pile of NOK April calls at the $9 strike. And THEN... I discovered spreads. It's a new chapter. I started chapter 1 with you. Thank you for your videos. I now share them with my sister and brother in law who are now learning.
A customer of mine once used this phrase: "You put it where the goats can get it." 😆 Thank you for the clear and highly understandable explaination!
Are you ever obligated to buy or sell actual shares of the holding you are optioning in the vertical spread, or do they always cancel each other out?
You are a master teacher. Beautiful job!
Thank you so much!
You should do more lessons. New Subscriber.
Rony John We haven't posted a new RUclips video in awhile. Been busy with getting a few other things in place recently... but we definitely plan to post a TON to RUclips in 2017. Stay tuned!
Thanks for subscribing!
Excellent explanation. The only thing I would have added to further show the power of vertical spreads is to state the potential ROI for that winning trade with 1st example --- ie.. u sold a 100/105 vertical call spread for $180 credit / $320 investment. Multiple ways to win....If the stock tanked, remain flat or even went up a bit by a few points, max profits are captured for a 55% ROI. That is HUGE! U can't make ROIs like that trading stocks outright.
Great point! And you're exactly right. High probability trading strategies get a bad reputation because people think you can't make big returns unless you are buying naked options.. Well, like you said, 55% is pretty huge especially when your probability of profit is upwards of 70%!
Thanks for the comment!
#facts
@@skyviewtrading "High probability trading strategies". IF this were to exist, we'd all be flush with mad money. If it doesn't, then you're here peddling.
Wow! Loved it. I have spent so much time trying to figure this out and all I had to do was watch this 10 min video. Very clearly articulated. Thank you.
That's awesome!! Really glad to hear that. Check out our 3 free videos on our website to help you start putting this strategy into practice in the right way :)
Thanks for the comment. We appreciate it!
I don't understand all of it yet, but I'm sure I will once I've watched it about 8 times. Great video!
Glad you liked it! Let us know if you have any questions!
I shall understand this...one day...and I will be king of the stocks
Most newbies fail simply because they don't understand how the market works in general or in particular how the market relates to stock or currency pair they entering. If a retail trades doesn't grasp what the market makers are doing and when they are doing it, the greatest strategy in the world will fall. For new traders the markets are like entering an F1 race before you've passed your drivers license test. I am a beginner I never believe I made $30,000 in just 1 week from trading and with the market. an expert financial analysis and he made me learn to read and understand the language of price action. He guides me with the exact time frame to trade and now I just received me first withdrawals of $30k in my bank account today I'm very happy, my advice is for you to contact him he will guide you perfectly well, and thank me later, I guess this is a good way to show my heartfelt appreciation for literally breaking the chain of my financial debit when I needed it most.
(harrydonald364@gmail.com)
You’re trash.
This is so great! No unnecessary technical details, great illustrations, clear explanations. What would be your recommended probability of profit to enter a trade? Above 60%, 65%, 70%?
Thank you for the video. The best I found by far, really clear and informative. Graphics have been really helpful. Very well explained.
You're very welcome! Glad you enjoyed! Also, thanks for the sub!
@@skyviewtrading I'm confused on how and when to dump the options. Do you sell your call option in the money and let the time run out on the sell call option?
Thanks bro, that was very well explained! I did however, have to stop and think a few times and even rewind a couple of times 😆. I guess the "short" in shorting stocks stands for the bus I ride on!
Sky view trading is my favorite option trading video out there,easy to understand videos in complicated trading techniqes,thank you very much,you are the best in my book!!!!!😉
this might be a stupid question but when you say SELL 100 CALL, don't you have to OWN options to SELL? still confused about the concept..
Great video.. Have a question though.. Does the premium of the option go up or down $ for $
I don't understand shit. Lol. This is probably too advanced for me but basic for him. 😂
Same here. I’ll do some paper trades first.
Same here lol
Great videos for visual learners! You break down a complex process and make it understandable. Thank you!
Buy my new book - " how visual learning drove me to live in a van down by the river"
After watching this 10 minute video I now feel like I’m ready to yolo my whole account a spy Call expiring on Tuesday, wish me luck!
Anyone in here who 8 years ago bought a bunch of Netflix at 90$ per share ? You’re probably a millionaire now. , congrats
4:20 How do you compute $2,380 profit for the Buy Call @1.20?
Its late, but replying if someone has the same question : [ (25x100) = 2500 ] - [(1.20x100) =120] => Total Profit(2500) minus(-) premium paid(120) => 2380
Lost me at “so you want to do vertical spreads”
lol
It is meaningful if you think all about as long-term, if you think things in a short-term then you have to change your attitude in order to be a successful trader
So, question....
I had a put credit spread and the stock dropped hard so the option I shorted and the option I was long on BOTH became ITM. Would I have been able to sell the option I shorted (buy to close) and then been able to just ride out the put option I was long on? Idk if this is possible to do without repercussions seeing how it was initially entered as a "Put Credit Spread" so I took a somewhat large L at the end.
Apparently i'm dumb. That's what i learned
Chris Kline Nah man. The fact that you’re watching this at all proves the opposite.
Me too lol
The fact that you think that proves you are intelligent. Pay no attention to the man behind the curtain. You cannot beat the AI. Invest in the indexes and sleep at night.
Did you figure it out by now?
Learning here
"Apparently i'm dumb. That's what i learned" -A year later-that still cracks me up lol.
very helpful..thank you
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Many thanks, I have been researching "mispriced us stock options" for a while now, and I think this has helped. You ever tried - Genubrey Mispriced Infiltration - (do a search on google ) ? Ive heard some extraordinary things about it and my friend got cool results with it.
Winner of a video, I been tryin to find out about "options trading brokers" for a while now, and I think this has helped. You ever tried - Jenameron Penny Smackdown - (Have a quick look on google cant remember the place now ) ? Ive heard some great things about it and my work buddy got excellent results with it.
If anyone has trouble understanding, it’s basically buying a call and put on the same expiration date. So it kind of cushions your losses if your call or put doesn’t go in the money.
Isn't this terrible risk:reward? Nearly 2:1. I'm confused.
I really appreciate your training videos. I'm still trying to understand spreads. thanks for posting.
did you understand it now
what would happen if the options were exercised?
TK KT then you purchase 100 shares of that company if you don’t have the money then it expires worthless
could you answer that question during these last 3 years? I have the same question now
I really love how he teach this he really remember to keep it simple and easy for absolute beginners some youtube start out simply and then they forget and start making it complicated and then you lost only 2 problem wish his videos was in order and 2 wish they was a little longer I enjoy learning this stuff gotta grandbaby who gonna need
I've been slanging some puts lately that have done well. Looking forward to employ this strategy
So if you're assigned and don't any stocks in a spread, what happens?
"Very small chance." Today Jun 25 2018 NFLX at 384
It was relative to the length of the contract.
This dude breaks it down righteously
Damn, you are goated, very unselfish if you to have these legit tutorials about how to ACTUALLY make money, good luck, you earned a sub
Thanks for your wonderful presentations. Love it!
santana0566@gmail.com
please reply to dinkar1944@gmail.com for your consultation process.. thanks..
At 4:13 you say we have a $2700 loss.. Can you explain how you got this figure?
Ok, first it's important to note that options have a multiplier of 100.
If we buy an option at 3.00 and sell it at 30.00, then we made 27.00 (or +$2,700). Well, on the flip side, if we were short that option (like in the example at 4:13) then we would have lost $2,700.
And the reason the option was worth 30.00 is because it was 30 points in-the-money (stock at 130 and call option strike of 100 is 30.00 difference).
Thanks for your comment and we hope that helps answer your question. Happy Trading!
current stock price (130) - strike price (100) = 30. then 30 - premium (3) = 27. 27 x 100 shares = 2700.
Its likely because you collected the $300 when you sold the call, you collect the premium. So you need to deduct the $300 gain from any losses you incur. Vice versa for the buying, you paid for it.
What happens if the person you opened to sell with decides to exercise the options...or would you only be responsible for the $3000 difference in price?
Selling the naked option (call) is extremely risky without close attention and a quick exit strategy ie. taking off 25% max profit early "quitting while you're ahead". These strategies require very high margin/account value and trading level. If you sold the naked option in this video, you would need to have an early exit strategy to prevent catastrophic losses; eg. closing it out early if you are in the process of losing 2X credit received (if the stock sky-rockets). If you sold this much safer call vertical spread and the stock goes to 130, you lose $2700 on the short call, but make $2380 on the long Call that you bought for protection. If you were assigned on this call (a.k.a. the other party exercised that deep ITM call) first... you would remain calm... and then you exercise YOUR ITM option worth $2380, thereby, again, limiting your max loss to $320 (+exercise fees). Both options would automatically be exercised if you let them both expire ITM (NEVER!!) or if you go on vacation and happen to forget about the trade (NEVER!!) 8^0.
I’ll need to go over a couple more times but the basic thought process is locked in. Great video, thank you !
Its not really a loss of $320 but you are missing $320 from the run up to $130.
Netflix is almost 400 now .. I wish I had bought it lol
Aaash N lol
Thanks, it's easy to understand.
The best video I've seen on the topic, thanks a lot.
You are bloody awesome at explaining! Thanks for sharing your knowledge.
Thank you, Sky View.....great info/lesson....way to go.
Awesome video
Is vertical spread = credit spread?
Finally someone actually explained!
Thank you!
A really great video, it's important we have these basic knowledge before engaging the market. Am thankful I have managed to remain profitable thanks to Eric Grinwis a professional who assist me with my trades.
I have been struggling with my trades for a few months now lost a total of $2700, now am in search of a profitable solution I can earn from.
Am newbie with no much experience, can Eric assist me as I start up.
Yes he can, his ensured my trades are lucrative and has provided me with a well structured trading system that has profited me so much on a long run.
I would like to know more, how do I contact him.
You can reach him on telegram with Online_Eric for more information.
i am a daytrader and i trade stocks, this is confusing lol
How do you compute the math for the 130 share price example? Specifically the loss of 2700 and gain of 2380.
The biggest thing missing from this is the fact that one of the options serves as collateral for the other and you don’t need either the buying power or shares for a simple sell call/put strategy
Great demonstration. This has enabled me to make more trades.
Awesome, glad it was helpful!
Excellent. Very clearly explained. Helped to eliminate so much of my confusion with this strategy. Thank you so much.
You're very welcome!
In a vertical, could one exercise the sell and let the buy expire?
Wow... excellent summary and easy to grasp graphics!
Great video. Only question I have is What happens if you close he options trade before the expiration date, let’s say strike price at $90? If the price gets there in 1 week instead of 1 month can I close the trade then and still receive the max profit?
🤯🤯🤯 it sounds simple but my minds blown. Options is the first time in my life I wish i paid attention in math class
Just keep watching all the videos and you'll get it!
dude, uve said u'll explain what BOTH "sell vertical spread" AND "Buy vertical spread", but as it seems u've forgotten about the last one... just saying to be correct
Yet another brilliant vid-torial! The wat the graphics are presented make the learning process that much easier... Many Thanks!
Thank you, Dominic!
Great explanation. However, with my horrible options trading luck, that 1% chance of a stock going above the break-even price of the trade would be 99% chance for me.
i didn't get it but this is my second day of even looking at options. This seems like the best way to go, im going to do my second trade using this technique. After my first options trade i didn't understand the close information, but i made $80.
Thank you everyone for the comments, I can't stop im dying 😭 🤣 I'm with half of you I was good for about two min in this video then found myself just staring at the screen. Saying wait, what ,how is that, hold on, how'd he get thoses numbers, slow down, Then gave up to the comments and made me feel good im not the only one
but I really like this vlogger for being honest with people giving you all the scenarios. keep up the great work.
Your explanation is brief and concise direct to the point...Excellent lesson.
Glad it was helpful!
That was a GREAT tutorial!!!.. I have to look at it a few times (repetition),... but I learned a lot, thnks.
Would you not get assigned if the stock price is between above the call you sold and below you call you bought? Is it because you can sell the shares if assigned? The spread takes that into account t?
Would you have ever guessed that Netflix would be trading at $539 today when you made this video?!
Awesome tutorial! I loved the illustrations and walkthrough in TOS. Thank you!
Beautiful. Learned so much from this excellent and concise explanation!
I find it totally amazing these videos are free. So well done. Graphics are spot on. I guess once the subscribership is larger, ads will be sold. But bravo on clear lessons.
Great video. The only thing you didn't say was how far out you picked your spread. 1 week? 1 month? 1 year?
Thank you! We typically go 30-60 days out, with 45 being the sweet spot.
Thank you for these, great work. I would be interested on how you would go about holding a long vol position while limiting negative carry
Love your videos! I finally understand options! Thank you!
Glad you like them!
Could you please explain what happens before expiration. If the option spread reaches its max potential. How do I execute it? Do I just wait till expiration and hope it stays high?
Will there be a situation where only one side of the option is filled? i.e only the buy side or the sell side of the option is filled?
Love the Video, but damn it's a little confusing, the explanation is GREAT, my understanding is confused, does anyone know of a great service that tells you what to buy and gives you a strategy ? Love this video and I really want to get into VERTICAL SPREADS, because it minimizes your risk and it doesn't take a lot of money to start :) Thanks SkyView Trading for the great lesson and sharing your knowledge :) March 24, 2020, CoronaVille. . . . learning a new skill, it would be cool if SkyView would read and respond to comments . . .
Thank you for your tutorial. I have started spread trading❤
That's awesome to hear! Keep up the hard work!
@@skyviewtrading thank you
How does the broker handle the short call ITM at expiration if your long call is OTM? Do they purely debit your account the difference between the stock price at expiration and the strike? Just trying to understand how the exercising works with the flow of money.
If spreads are less risky than buying a normal call/put why do brokers only allow it for margin account holders and not ordinary cash accounts?
I can understand engineering better than I can with options!
how did you calculate the profits and losses @4:35
I'm a novice. I'd like to see a video in which it's taught how to set up an account, and how to test one trade without much risk. Even if I make $1, as long as I understand the concept, I'd be on the right track. This is a video for advanced traders.
Check out our website. We teach all of this. :)
If you open a TD Ameritrade account you can get on the Think or Swim platform and choose what they call "paper trading" that allows you to enter practice trades in real time to see how they work out without risking any real money.
@@dennismanzardojr9920 And they have an education platform,
@@dennismanzardojr9920 This is actually sound.. But use that as a filter, then use Robinhood to trade at lower fees or for free. Just an opinion but ... reality is real.